AML/CFT obligations for leasing companies in Algeria (2026)

Leasing is often seen as an equipment financing business, far removed from anti-money laundering concerns. That is a mistake. Because it involves three parties, the lessee, the supplier and the leasing company, and valuable assets that are easy to resell, it offers several entry points for illicit funds. The AML/CFT obligations for leasing companies are therefore comparable to those of banks, with specific risks linked to the financed asset and the flows surrounding it.

Since Algeria's removal from the FATF grey list on 19 June 2026, supervisors expect all financial institutions to demonstrate effectiveness, not merely to have procedures. The next mutual evaluation, expected around 2029, will also look at non-bank financial sectors. This guide covers the applicable texts, the key obligations adapted to leasing, the red flags and the mistakes we encounter most often.

1. Applicable texts and supervisory authority

Law No. 05-01 of 6 February 2005, amended in particular by Law No. 23-01 of 7 February 2023 and Law No. 25-10 of 24 July 2025, defines a financial institution by reference to activities carried out on a commercial basis, such as taking deposits, lending or leasing. Any business engaged in leasing is therefore an obliged entity within the meaning of Article 4. To understand the scope of this reform, read our article on Law 23-01 on money laundering in Algeria.

In Algeria, leasing companies operate as licensed financial institutions (établissements financiers). The list of licensed banks and financial institutions as at 4 January 2026, published in Official Journal No. 9 of 2026, includes eight financial institutions, several of which specialise in leasing. Carrying on this activity without a licence is prohibited: in December 2020, the Bank of Algeria publicly warned against an entity claiming to be a leasing institution without the required status or authorisations. When a bank offers leasing itself, the activity falls within the bank's own AML/CFT framework.

Article 10 bis 3 of the law designates the Banking Commission as the control, supervisory and regulatory authority for banks and financial institutions. The Bank of Algeria's texts therefore apply in full to leasing companies:

Suspicious transaction reports are filed with the CTRF, the financial intelligence unit attached to the Ministry of Finance, whose Instruction No. 02 of 4 December 2023 sets out the reporting arrangements.

2. Key obligations

Risk classification

Regulation No. 24-03 requires a risk identification and assessment framework proportionate to the nature and size of the institution. Instruction No. 04-2026 provides for rating each customer on four parameters: the customer, products and services, geographic areas and delivery channels. In leasing, the "product" analysis must take into account the nature of the financed asset (vehicles, construction machinery, industrial equipment, commercial property), its liquidity on the second-hand market and how easily its value can be manipulated. The introduction channel (dealer, supplier, business introducer) is also a risk factor.

Customer due diligence and beneficial owners

Leasing customers are mostly businesses. Identifying the lessee, its legal representative and its beneficial owners is therefore central, including a check of the public beneficial ownership register kept by the CNRC, as required by Instruction No. 04-2026. The economic purpose of the financing must also be understood: does the asset match the lessee's actual business and size? PEPs require senior management approval; files are reviewed at least once a year for high risk, every three years for medium risk and every five years for low risk.

Leasing adds two business-specific checks: knowing the supplier, who receives the funds, and verifying the existence and value of the asset, through comparative quotes, an appraisal or a site visit where the risk warrants it.

Suspicious transaction reporting to the CTRF

Any transaction, or attempted transaction, that the leasing company suspects derives from an offence or is linked to terrorist financing must be reported to the CTRF, without informing the customer. Account managers and collection teams, who are on the front line, must know whom to escalate an anomaly to and how to document it.

Asset freezing and targeted financial sanctions

The lessee, its beneficial owners, its guarantors and the supplier must be screened against the applicable sanctions lists, in particular those of the United Nations Security Council. Dual-use goods and certain imported equipment call for particular vigilance with regard to proliferation financing, now covered by Law No. 23-01 and Regulation No. 24-03.

Record keeping

The file must trace the whole contract life cycle: identification, analysis of the asset and supplier, payments, rentals, exercise of the purchase option, any early termination. These records are retained for the periods set by law and produced promptly to the Banking Commission or the CTRF.

Training and internal organisation

Regulation No. 11-08 organises internal control in financial institutions. Even a small leasing company needs an identified compliance officer, independent of sales teams, reporting to senior management, and regular staff training. Our guide to the compliance function in Algeria explains how to position it.

3. Sector-specific typologies and red flags

• A large first rental or down payment paid in cash or by a third party with no apparent link to the lessee;
• Rentals paid from different accounts belonging to third parties, or at a pace inconsistent with the lessee's cash flow;
• Exercise of the purchase option or early repayment shortly after signing, funded by money of unexplained origin;
• A request, after termination, to refund an overpayment to a third party's account;
• An invoiced price well above market value, or a supplier related to the lessee (shared shareholders, address or managers);
• A recently created supplier with no verifiable business, or one that changes bank details at the time of payment;
• A newly registered lessee with no track record seeking large financing or taking out contracts with several institutions;
• An asset unrelated to the declared business, quickly resold, sub-let or used by third parties;
• Sale-and-leaseback of assets whose ownership or origin is poorly documented.

4. Common mistakes

In non-bank financial institutions, we regularly observe the same weaknesses:

• Analysis limited to credit risk: the file assesses the lessee's solvency but never the source of funds for the down payment or early repayments;
• A supplier never examined: treated as a mere vendor, even though it is the one receiving the funds;
• A KYC procedure copied from a bank's, without adaptation to the financed asset or to leasing payment flows;
• Few or no suspicious transaction reports, often due to a lack of detection scenarios rather than an absence of risk;
• A compliance officer holding other roles, notably in sales or collections, which undermines independence;
• Legacy files never upgraded to Instruction No. 04-2026, especially on beneficial ownership.

5. How Hodemia Consulting supports leasing companies

Founded by Fayçal Lounes, who has nearly twenty years of regulatory compliance experience at EY (Luxembourg, San Francisco, London) and as Director of Regulatory & Compliance Services at KPMG in the Middle East, Hodemia Consulting offers leasing companies:

• A compliance diagnostic (2 to 4 weeks): gap analysis against Regulation No. 24-03 and Instruction No. 04-2026, with a prioritised action plan. See our compliance diagnostic approach;
• AML/CFT programme implementation and KYC remediation: leasing-specific risk mapping, supplier and asset due diligence, alert scenarios, review of existing files;
• Compliance & Ethics training (1 day) for account managers, collection teams and back office (see our training);
• The Leadership & Compliance seminar (2 days) for senior management and the board.

To discuss it, contact us.

Conclusion: put the financed asset at the heart of the framework

The AML/CFT obligations for leasing companies stem from the same texts as those for banks: amended Law No. 05-01, Regulation No. 24-03 and Instruction No. 04-2026, under Banking Commission supervision. Their specificity lies in leasing itself: an asset, a supplier and flows that can be used as vehicles for laundering. Institutions that build these dimensions into their risk-based approach, document their due diligence and train their teams will be ready for the focus on effectiveness that will mark the evaluation expected around 2029. For the big picture, read our complete guide to AML/CFT compliance in Algeria.

Fayçal Lounes

Founder of Hodemia Consulting

Nearly 20 years of international experience in regulatory compliance, risk and governance (EY in Luxembourg, San Francisco and London; Director, Regulatory & Compliance Services at KPMG Middle East). Certified coach, trainer and academic.